It’s tough to follow because, like much of Baumann’s writing about sports economics issues, it’s a polemic that’s not based on Baumann having a good grounding in the necessary analytical skills and background knowledge (as others have pointed out, he doesn’t appear to understand much about how the NBA CBA or luxury tax actually work).
As for your first point about Nowitzki, I generally agree with you though I’ll also point out that Baumann’s claim of “an 80% pay cut” isn’t at all a valid comparison. What team would give Dirk $25 million per year? He was of course at one time a great player, but now he’s 39, coming off a year when he missed 1/3 of the season due to injury, and roughly an average player who is trending in the wrong direction (going by stats such as PER, real plus minus, and win shares). Perhaps he did give up some money versus what he could get as a free agent, but it’s ludicrous for Baumann to use the declined team option as the comparison.